You may ask yourself, “As a finance leader, why is this a call to action for me?” Because finance is not an independent discipline; it needs to be managed and led in tandem with all other disciplines in an organization. In the worst case, finance and accounting can dominate strategy and stifle innovation. In the best case, finance and accounting can be a leader of innovation and a driver of successful achievement of strategy and mission. If finance leadership is not involved either in a direct leadership role or in a very strong support capacity, innovation efforts are going to have a far lesser chance of being successful—and almost zero chance of having any long-term staying power and influence in an organization. Finance, strategy, and innovation are inextricably linked, and finance and accounting leaders need to have a role in innovation governance in order to help and lead our businesses in value creation.
67% of respondents agreed or strongly agreed that innovation is a key focus in their organization’s strategy.
92% agreed or strongly agreed that innovation should be a key focus in their strategy.
But 47% agreed or strongly agreed that while their organization wants to innovate, short-term financial risks and goals get in the way. Another 25% were neutral. That means only 28% truly make innovation a priority and don’t push it to the side to get short-term results.
Businesses need stronger leadership around innovation and a way to measure results and value. Otherwise, they’ll continue to push their innovation initiatives to the side when pressured for short-term results. You know it’s important and is key to your strategy, so let’s focus on how to execute and how to measure to drive results.
Consider the opening quote by Robert Kennedy again: “Some men look at things the way they are and ask why? I dream of things that are not and ask why not?” Yes, dream. Dream big, dream small, dream in all shapes and sizes! Consider things as they are and challenge the status quo. But don’t just be a dreamer. Be a disciplined, multifaceted dreamer, facilitator, and leader who empowers others to dream and, therefore, innovate. Innovation is a team sport! Innovation can’t be about one person sitting in a think tank dreaming up ideas.
While I love the Kennedy quote as a great example and reminder to stretch our thinking from the current state, I also believe the quote can be a disservice by suggesting that people see innovation as only something dreamers can do. We ALL can innovate! We ALL can create value!
With a desire to innovate and many data points telling us we better innovate or get left behind, let’s discuss in Part I what is really needed for innovation to succeed. Let’s consider what kind of innovation we want to promote and get from our employees and other stakeholders and then define the skill set we’ll need to make it all happen!
Notes
1 1 Gary Hamel and Nancy Tennant, “The 5 Requirements of a Truly Innovative Company,” Harvard Business Review, April 27, 2015.
2 2 Tony Davila, Marc Epstein, and Robert Shelton, Making Innovation Work: How to Manage It, Measure It, and Profit from It, Pearson FT Press, 2012.
3 3 Larry Downes and Paul Nunes, Big Bang Disruption: Strategy in the Age of Devastating Innovation, Portfolio, 2014.
4 4 Marc de Jong, Nathan Marson, and Erik Roth, “The Eight Essentials of Innovation,” McKinsey Quarterly, April 2015, p. 2.
CHAPTER 1 Innovation Governance
Innovation is creativity with a job to do.
—John Emmerling
Innovation governance. It sounds like an oxymoron, doesn’t it? Trust me, the first time I said those two words, they just didn’t feel or sound right. Then after some “fierce conversation” with a good friend and colleague of mine, I started to see this combination in a different light. In further spirited discussions with others on the topic, I then saw the need to explain and make the case for better innovation governance in our businesses.
My own background has had both governance in my early finance and accounting years and innovation in my later years running businesses and serving on executive teams. Whenever I look back at the times I researched and executed successful innovation, I realize that more and more of that innovation success came to be because of good governance!
Random epiphanies and great ideas don’t need governance, but they are just that—random. But systematic, holistic, continuous innovation at a larger scale and from a multitude of sources in your business and value chain does require and thrive with governance!
Consider the opening quote again: “Innovation is creativity with a job to do.” If you think about it, this really describes innovation governance. You need to be creative and ideate new solutions, but you need to execute with discipline to achieve the value. Simply said, you need both sides of the equation!
Innovation = Creativity and Ideation
Governance = Execution and Discipline
WHO IS RESPONSIBLE FOR INNOVATION?
Not that long ago, the title “Chief Innovation Officer” would have been sneered at as a made-up or lofty title with very little real responsibility in an organization. That’s no longer the case, as one Director of Innovation Strategy, Harvey Wade, explains: “Due to greater competition, tightened budgets, and new technology, the importance assigned to innovation as a legitimate and vital business process has been elevated in recent years. This has placed a newfound importance of whoever’s responsibility it is to ensure innovation is being encouraged and helping to deliver results… Globalization, the recession, and the fact consumers have more information available to them has certainly created a more crowded and competitive business landscape. Companies are under huge pressure to evolve at a new pace, stay ahead on a realistic budget [i.e., do more with less], and squeeze as much as possible out of what they’ve got.”5
In short, companies need to execute their current offerings as best as possible to aid in funding new improvements and ventures. This requires constant innovation.
Wade goes on to say:
“To ensure consistent and meaningful progress, decision makers within companies must ask the right questions about the current state of the organization, the industry, and where they are both heading—seemingly obvious analysis [that] many businesses fail to do adequately.
“Finding answers to these questions, and solutions to the issues they raise, is even less frequently mastered. This process extends beyond the decision makers or boardroom, and its success relies on the effective use of an already existing asset of the organization—its people.
“Within business departments, incremental innovation is common, but especially in large or diverse organizations, someone is needed to manage the transformational strategic innovation that straddles the entire business,